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Posts Tagged ‘truth in lending act’

Implementation of TRID Rough; Charges Fly

October 21st, 2015 Comments off

mortgage    andyenstallblog  creditThe new disclosure rule which combines the previous Truth in Lending Act (TILA) requirements with the Real Estate Settlement Practices Act (RESPA) into one Integrated Disclosure, called TRID, has not rolled out well due to mortgage software problems and Congressional inaction, said CFPB Director Richard Cordray to the Mortgage Bankers Association (MBA).

The “Know Before You Owe” rule gives borrowers three days to examine loan documents before closing, but has drawn the ire of some lenders for potentially slowing down loan closings, and requiring borrowers to pay more for the lender to hold an agreed-upon interest rate longer. This is called a loan lock, because it locks in the interest rate during the closing of a loan transaction, but for a fee, as marketwatch tells MHProNews.

Prior to the new rule, the rate was good for 30 days, for which the consumer did not pay. However, some mortgage lenders fear with an extended closing period, the loan lock may have to go as long as 45 or 60 days, with consumers possibly incurring hundreds or thousands in additional costs to hold an interest rate.

Cordray denies closings have been longer or that consumers are incurring higher costs, saying, “These claims reflect a failure or perhaps a refusal to understand what the rule actually says.

Closing delays will not show up until sometime in November when the loans made after the Oct. 3 implementation date will start closing.

TRID was enacted in response to lenders during the housing boom of the last decade who would increase the interest rate, add fees or change loan products at the last minute. Under TRID, mortgage lenders have to give consumers more time to understand any changes to the transaction.

Cordray blamed vendors of the software for the problems. “Some vendors performed poorly in getting their work done in a timely manner, and they unfairly put many of you (lenders) on the spot with changes at the last minute or even past the due date,” Cordray said. He said the CFPB will focus on how these vendors ae affecting the marketplace.

Jonathan Corr, president and CEO of Ellie Mae, which distributes about a third of the TRID compliant software, said while some lenders were not adequately prepared, they are dealing with loans made before and after the new rules took effect, which requires two sets of software. “This is the biggest change to the mortgage industry in 40 years,” said Corr, noting the process will likely iron out by mid-2016.

Still, the MBA wants Congress to provide a grace period until Feb. 2016 so that errors made in the TRID rules will not lead to enforcement sanctions. However, the White House says the mortgage industry has had enough time to understand the disclosure rule and it would veto any legislation to extend the deadline. ##

(Image credit: andyenstallblog)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

CFPB Postpones Implementation of Know Before You Owe

July 8th, 2015 Comments off

mortgage app  housingwire creditSuggesting the delay may be beneficial to both lenders and consumers, the Consumer Financial Protection Bureau (CFPB) has delayed for a second time the launch of the integrated disclosures for residential mortgage loans under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). It is also called the Know Before You Owe rule.

According to suprajd, members of Congress from both sides of the aisle suggested the CFPB postpone the deadline to give lenders additional time to put in motion the necessary changes for the new disclosure form and to test compliance systems.

While the postponement may harm consumers who will not be able to take advantage of the new rules as soon, the CFPB states in the long run the transition will smooth the path for borrowers by giving lenders a longer time to adjust.

The TILA-RESPA Disclosure rule resulted from the Dodd-Frank Act to give borrowers transparency regarding main features of their mortgages. Although the new launch date is Oct. 3 of this year, the CFPB may offer a grace period to lenders which will allow time for CFPB examiners to implement a compliance review of the new rule into their audit procedures. MHProNews understands TILA and RESPA both offer the opportunity for consumers to sue lenders for failing to comply with the new disclosure rule. ##

(Image credit: housingwire)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

New Final Rule Exempts Manufactured Homes

December 5th, 2013 Comments off

The Consumer Financial Protection Bureau’s (CFPB) new consumer disclosure forms, called “Know Before You Owe,” that will take effect Aug. 1, 2015, is designed to give the borrower more control over the mortgage loan process as well as add transparency to the transaction. Paul Trepeta of the National Association of Realtors, noting the CFPB retained the TILA (Truth in Lending Act) parts of the three-day waiting period, says, “This is a major change from what was proposed where even minor changes to the closing documents could have required a new three-day waiting period.” But he also acknowledges making the lender responsible for the documentation may lead to more cost and confusion for the borrower. In addition, as rismedia.com tells MHProNews, creditors and settlement agents are given sufficient flexibility “to arrive at the most efficient means of preparation and delivery of the Closing Disclosure to consumers,” according to the CFPB’s own words. The borrower must receive the Closing Disclosure at least three days before the loan closes; and any changes to to the Disclosure are permitted at closing without another three-day waiting period unless the lender changes the interest rate by more than one-eighth of one percent or changes the loan product. Also, the final rule does not apply to manufactured home loans, reverse mortgages, closed-end consumer mortgages or home equity lines of credit.

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CFPB Issues Exam Procedures

June 5th, 2013 Comments off

According to mortgagenewsdaily, the Consumer Financial Protection Bureau (CFPB) has issued updates regarding what examiners will be checking lenders for when the new regulations go into effect Jan. 2014. Noting these are the first of what is anticipated will be numerous updates, the examination procedures concern the Truth in Lending Act (TILA) and the Equal Credit Opportunity Act (ECOA). “The CFPB recognizes that the easier we make it for financial institutions and mortgage companies to follow the new regulations, the better off consumers will be,” says CFPB Director Richard Cordray. “By releasing details of what our examiners will be looking for well in advance of the effective date of most of the rules, we are giving industry more time to adjust.” As MHProNews understands, the updates deal with compensation, appraisals, escrow accounts and qualifications for loan originators. The CFPB is coordinating its efforts with other federal government regulators that oversee financial institutions and mortgage companies to ensure there is a shared understanding of the rules.

(Image credit: HousingWire)

MH Excluded from Definition of Higher-Risk Mortgage Loans

August 16th, 2012 1 comment

The Truth in Lending Act (TILA) was set up to promote informed use of consumer credit and increase transparency by requiring disclosures about its costs and terms. A joint group of federal agencies that oversee truth-in-lending concerns, including the Consumer Financial Protection Bureau (CFPB), are proposing to amend Regulation Z, which implements TILA. The revisions include a provision added as part of Dodd-Frank that excludes loans for manufactured homes in communities from the definition of “higher-risk mortgage loan.” The Indiana Manufactured Housing Association (IMHA) reports some industry lenders say they would not be able to make more than half of the loans they currently make on manufactured homes without this exclusion. MHProNews has learned if the loan is secured by the home and the land on which it sits (italics added), it could be considered a “higher risk mortgage”. Public comment on the proposal will be open until Oct. 15, 2012. See pp. 14, 38, and 44 of the attached link to the entire document forwarded to MHProNews by D.J Pendleton of the Texas Manufactured Housing Association.

(Photo credit: MHProNews)

CFPB’s Cordray Attempts to Allay Congressional Fears

January 25th, 2012 Comments off

HousingWire tells MHProNews.com Consumer Financial Protection Bureau (CFPB) Director Richard Cordray, appearing before a House subcommittee, says he is examining the exclusion of smaller banks from regulations targeted at larger firms responsible for the housing crisis. He says the bureau will analyze how the rules might impact banks with assets below $10 billion. Responding to lawmakers ongoing concerns that the CFPB might be prone to overstep its boundaries, Cordray reiterated the oversight provisions that apply to CFPB that do not apply to any other agency. He says the qualified mortgage requirements will be proposed soon, and the rule that conjoins the Truth-In-Lending-Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) will be released before summer. He also says the CFPB will continue to assume its regulatory role over the entire mortgage process as well as non-bank lenders.

(Photo credit: bankrate)